Abstract

Financial services industries around the globe went through tremendous changes in the last decade, and deregulation was one of them In Canada, deregulation of the industry's four pillars; i.e., banks, insurance, trusts, and investment dealers, occurred on December 9, 1991. Since then, the Canadian government has allowed previously cross-ownership prohibited among the four pillars. The goal of this research is to study the act of the deregulation on two levels. First, to verify if the systematic risk of the pillars increased following deregulation, and secondly, to examine if mergers and acquisitions (M&As) following deregulation were creators of wealth. Results show that while the banks' systematic risk decreased following deregulation, the risk increased for the other three pillars. As for wealth creation, the bidders had significant positive abnormal returns, while the targets received significant negative returns.